Internal Scanning: Organizational

Analysis
 Organizational analysis is concerned with identifying and
developing an organizations resources and competencies
 What is an Internal Analysis?

Identifies and evaluates resources, capabilities, and

core competencies
Looks at the organizations
oCurrent vision
oMission
oStrategic objectives
oStrategies
Why Do an Internal Analysis?
It is the most important way to identify an
organizations strengths and weaknesses

Its needed for making good strategic decisions

RESOURCE-BASED VIEW
 Core and Distinctive Competencies

Competency: A cross-functional integration and coordination of

capabilities

Core competency: A collection of competencies that cross

divisional boundaries, is wide-spread throughout the corporation
and is something the corporation does exceedingly well

Distinctive competency: The core competencies that are

superior to those of the competition
 Core and Distinctive Competencies

VRIO framework (Barney)

Value- Does it provide competitive advantage
Rare- Do other competitors possess it
Imitability- Is it costly for others to imitate
Organization- Is the firm organised to exploit the resources
 Using Resources to Gain Competitive Advantage

Identify and classify resources in terms of strengths and

weaknesses
Combine the firms strengths into specific capabilities and core
competencies
Appraise profit potential- Are there any distinctive competencies?
Select the strategy that best exploits the firms capabilities and
competencies relative to external opportunities
Identify resource gaps and invest in upgrading weaknesses
 Access to a Distinctive Competency

Asset endowment
Acquired from someone else
Shared with another business
Built and accumulated within the company
 Access to a Distinctive Competency

Clusters is geographic concentrations of interconnected

companies and industries.
Access to:
Employees
Suppliers
Information
Complementary products
Determining the Sustainability of an Advantage

Durability: The rate at which a firms underlying resources,

capabilities, or core competencies depreciate or become obsolete

Imitability: The rate at which a firms underlying resources,

capabilities, or core competencies can be duplicated by others
 Determining the Sustainability of an Advantage

Transparency: The speed at which other firms understand the

relationship of resources and capabilities supporting a successful
firms strategy

Transferability: The ability of competitors to gather the resources

and capabilities necessary to support a competitive challenge

Replicability: The ability of competitors to use duplicated

resources and capabilities to imitate the other firms success
 Determining the Sustainability of an Advantage

Explicit knowledge: Knowledge that can be easily articulated

and communicated

Tacit knowledge: Knowledge that is not easily communicated

because it is deeply rooted in employee experience or in the
companys culture
 Business Models

Business models: When analysing a company, it is helpful to

learn what sort of business model it is following
Business Model is a companys method for making money in the
current business environment
Business model includes:
Who the company serves
What the company provides
How the company makes money
How the company differentiates and sustains competitive
advantage
How the company provides its product/service
 Value Chain Analysis

Value chain: A linked set of value creating activities that begin

with basic raw materials coming from suppliers, moving on to a
series of value-added activities involved in producing and marking
a product or service, and ending with distributors getting the final
goods into the hands of the ultimate consumer
 Industry Value Chain Analysis

Value chain segments include:

Upstream
Downstream

Center of gravity: The part of the chain that is most

important to the company and the point where its core
competencies lie.
Vertical integration
 Value Chain Analysis

Corporate Value Chain Analysis

Primary activities
Inbound logistics
Operations
Outbound logistics

Support activities
Procurement
Technology development
Human resource management
Firm infrastructure
Value Chain Analysis
 Value Chain Analysis

Corporate Value Chain Analysis

Examine each product lines value chain in terms of the various

activities involved in producing the product or service

Examine the linkages within each product lines value chain

Examine the potential synergies among the value chains of

different product lines or business units
Scanning Functional Resources and Capabilities

Simplest way to begin analysis of a corporations value chain is by

examining its traditional functional areas for potential strengths and
weaknesses.
 Scanning Functional Resources and
Capabilities

Basic organizational structures:

Simple
Functional
Divisional
Strategic business units- unique mission, identifiable competitors,
external market force, control of its business functions
 Scanning Functional Resources and
Capabilities
Corporate Culture: The Company Way

Corporate culture: The collection of beliefs, expectations and

values learned and shared by a corporations members and
transmitted from one generation of employees to another.
 Scanning Functional Resources and
Capabilities
Functions of corporate culture:
Conveys a sense of identity for employees
Generates employee commitment
Adds to the stability of the organization as a social system
Serves as a frame of reference for employees to understand
organizational activities and as a guide for behavior
 Scanning Functional Resources and
Capabilities
Corporate Culture: The Company Way

Cultural intensity: The degree with which members of a unit

accept the norms, values and other cultural content associated
with the unit.
Shows the depth of the culture
Cultural integration: The extent of which units throughout the
organization share a common culture
Shows the breadth of the culture
 Scanning Functional Resources and
Capabilities

Strategic Marketing Issues

Market position: Who are our customers?

Marketing mix: The particular combination of key variables

under a corporations control that can be used to affect demand
and to gain competitive advantage
Scanning Functional Resources and
Capabilities
 Scanning Functional Resources and
Capabilities
Product life cycle: Product monetary sales over time from
introduction through growth and maturity to decline
 Scanning Functional Resources and
Capabilities

Brand: A name given to a companys product which identifies that

item in the mind of the consumer

Corporate brand: A type of brand in which the companys name

serves as the brand
 Scanning Functional Resources and
Capabilities

Corporate reputation: A widely held perception of a company by

the general public
Stakeholders perceptions of quality
Corporations prominence in the minds of stakeholders
 Scanning Functional Resources and
Capabilities
Strategic Research and Development Issues

R&D intensity: R&D as a percentage of sales revenue

Technology competence: The development and use of

innovative technology

Technology transfer: The process of taking new technology

from the laboratory to the marketplace
 Scanning Functional Resources and
Capabilities
Strategic Research and Development Issues

R&D mix is the mix of:

Basic R&D focuses on theoretical problems
Product R&D concentrates on marketing and is concerned with
product or product packaging improvements
Engineering R&D is concerned with engineering, concentrating
on quality control, and the development of design specifications
and improved production equipment
 Scanning Functional Resources and
Capabilities

Strategic Operations Issues

Flexible manufacturing for mass customization

Computer assisted design
Computer assisted manufacturing
Economies of scale
 Scanning Functional Resources and
Capabilities
Strategic Human Resource Issues

Teams:
Autonomous (self-managed): A group of people working
together without a supervisor to plan, coordinate and evaluate
their work
Cross-functional work teams: Here various disciplines are
involved in a project from the beginning
Concurrent engineering: Specialists work side-by-side and
compare notes constantly to design cost-effective products with
features customers want
 Scanning Functional Resources and
Capabilities
Strategic Human Resource Issues

Virtual teams: Groups of geographically or organizationally

dispersed coworkers that are assembled using a combination of
telecommunications and information technologies to accomplish
organizational tasks driven by 5 trends.
 Scanning Functional Resources and
Capabilities

Strategic Human Resource Issues

Flatter organizational structures

Turbulent environments
Increased employee autonomy
Higher knowledge requirements
Increased globalization
Increased employee decision making
 Scanning Functional Resources and
Capabilities
Strategic Human Resource Issues

Quality of work life includes improvements in:

Introducing participative problem solving
Restructuring work
Introducing innovative reward systems
Improving the work environment

Human diversity: The mix in the workplace of people from

different races, cultures and backgrounds
Provides a sustainable competitive advantage
 Scanning Functional Resources and
Capabilities

Strategic Information Systems/Technology Issues

Information systems/technology contributions to performance:

Automation of back office processes
Automation of individual tasks
Enhancement of key business functions
Development of a competitive advantage
 Scanning Functional Resources and
Capabilities

Strategic Financial Issues

Financial leverage: It is ratio of total debt to total assets

Used to describe how debt is used to increase earnings available
to common shareholders

Capital budgeting: The analysis and ranking of possible

investments in fixed assets
Synthesis of Internal Factors